Entrepreneurs have a lot on their plate, as do all business owners. However, whether you’re just starting out or you’ve been in business for years, you need to makes sure that you stay up to date on your taxes. Missing taxes returns or filing them late can bring huge headaches, and in some cases big fines and/or even prison time. If you don’t file a return you stand to be penalized 5 percent every month for the unpaid amount with a maximum of 25 percent.
Some business owners who take a loss figure they don’t need to bother filing a return because they don’t owe any tax. That’s also a mistake. Did you know that you could actually use your losses for future years, or even past years, when you make a profit? That can help reduce your tax bill. You might also be missing out on big tax credits during those down years. So file a return even if you don’t owe any taxes.
On the other hand, some business owners know they will owe money to the IRS but think that the agency will never get around to tracking them down. Don’t make that mistake either. It might take a while, but the IRS will most likely eventually come calling. If you have already made the mistake of not filing for a year or more, then be proactive and start filing late returns now. The term better late than never is very true when it comes to tax returns.